Two books arrived in the mail while I was away. I was at a Liberty Fund seminar. During a conversation at dinner, someone introduced me to some concepts due to Michael Oakeshott. Gene Callahan explains it,
Central to Oakeshott’s last major work on politics, On Human Conduct, was his conception of “civil association” and “enterprise association” as fundamentally different types of human relationship. In an enterprise association, individuals are related by their agreement to cooperate in pursuing some substantive end–for example, the participants in the Coca-Cola Corporation hope to make money by selling soda. In contrast, members of a civil association have no such goal in common; they are related in their recognition of a body of law that delimits the acceptable means that they may employ in pursuing their own, diverse ends. Different strands of European political thought have characterized the state as either an enterprise or a civil association, and Oakeshott sees these competing characterizations as a major source of the confused nature of the modern European state. His sympathies clearly lie with those who conceive the state as properly being a civil association, which he regarded as the most civilized conception of the role of the state. He noted that a compulsory enterprise association–for example, a state attempting to achieve some desired distribution of income–cuts “the link between belief and conduct which constitutes moral agency” (qtd. p. 170). Franco does not seem to grasp fully Oakeshott’s argument against compulsory enterprise association, remarking, “[it] seems to relate only to the extreme or totalitarian case” (p. 170)–as though being forced to work toward an end one has not freely chosen is unproblematic if it is only for a few hours per week.
This made me interested in both On Human Conduct and in the book Callahan reviewed, an introduction to Oakeshott by Paul Franco.
Can a state truly be limited to a civil association, that is a set of rules that are neutral with respect to ends? Think of the Internet protocols, which are in many respects highly neutral with respect to the content that is distributed over the Internet. Could a state operate that way? Anyway, while I was at the conference, I received The Foreclosure of America, by Adam Michaelson. It is billed as an inside story of Countrywide and the mortgage crisis. One of my favorite sentences is on p. 8:
I immediately noticed Allison Pringle there, a midlevel executive whom I simply called “Harvard,” because she had the annoying habit of obliquely reminding everyone in every meeting that she had gotten her MBA from Harvard Business School.
If you’ve worked in a corporate environment, then chances are you can relate to Allison as well as to many of the other people in his book. Basically, the book is a memoir of a middle manager living the soap opera of corporate life. The fact that the firm was a player in the mortgage crisis is only incidental to 95 percent of the content of the book.
Michaelson was in marketing, not finance or risk management. It so happens that he predicted that Countrywide’s more exotic loans would cause its downfall and that Countrywide ultimately would be bought by Bank of America. But he offers almost zero in terms of financial insight or insight into how Countrywide went down. In fact, the book doesn’.t answer the most basic question that I have: given that Countrywide’s business model was to originate and sell loans, how did the mortgage crisis cause its downfall? In theory, Countrywide should have caused the buyers of its loans to go down, but Countrywide itself might have survived.
I also received Path to Prosperity, the first volume of papers by The Hamilton Project. It comes from Brookings, and is edited by Jason Furman and Jason E. Bordoff. Furman became one of Obama’s key economic advisers during the campaign. My favorite sentences are in an essay on unemployment insurance by Lori G. Kletzer and Howard Rosen. On p. 78,
Unlike the cyclical job losses that characterized the labor market and economy from 1945 to the 1980s, job losses now are related more to structural factors, with workers simultaneously changing jobs, industries, and occupations. The current UI program, though, is fighting an earlier battle, one of widespread temporary layoffs, where workers were attached to a single employer.
As readers of this blog know, my worry is that you could substitute for “current UI program” the phrase “big fiscal stimulus.” We don’t know how a fiscal stimulus will work in today’s labor market.
My least favorite sentence comes from the paper by Jens Ludwig and Isabel Sawhill on education.
Our society’s goal should be to intervene early, often, and effectively in the lives of disadvantaged children from birth to age ten, so that by the end of this period we substantially narrow–or eiliminate–disparities in cognitive and noncognitive skills across race and class lines.
Clearly, the authors do not respect Oakeshott’s distinction between a civil association and an enterprise association.
READER COMMENTS
Rod McFadden
Jan 19 2009 at 2:12pm
Be interesting to see someone compare this to d’Tocqueville’s writing about the American perchant to form associations
Lance
Jan 19 2009 at 2:24pm
Oakeshott has always been one of my favorite authors. His collection of essays in “On History” and “Rationalism in Politics” are excellent.
Unfortunately, he has always been one of the least known philosophers, probably due to his penchant for abstract analysis that avoids the odd conclusions of a Sartre-type thinker.
However, I am not totally sure if it’s entirely realistic for a state to merely be a civil association. I think people wish for some unifying principle or ideology beyond a recognition of a rule of law and the protection of inalienable rights. One wants the motivating factor of unity in purpose and design that comes with large-scale projects initiated by the government.
Daniel Klein’s “The People’s Romance” (which you have linked too previously) explains this well with the idea that the state becomes the foci of unity and order.
dearieme
Jan 19 2009 at 4:44pm
Don’t states also take on an aspect of an enterprise organisation when one of their purposes is, or is purported to be, protection of their citizens from invasion (or, indeed, immigration)? Or, to take another example, a purpose (of manifest destiny) to expropriate the Indians’ land?
hacs
Jan 19 2009 at 8:47pm
A State as “the rules of the game” should be immune to the outcomes of that game, otherwise it would be a neutral-by-period State, that is, a non neutral one at long term. Alternatively, any change should be equally beneficent/maleficent for everyone, preserving its neutrality over time.
The two (unrealistic) alternatives promote the immobility, that is, a neutral State would be a inert State.
hacs
Jan 20 2009 at 12:57am
Complementing the comment above, an inert State would be suitable to a large diversity of economic and social contexts, permitting certain unalienable rights, that among these are life, liberty and the pursuit of happiness, if it is minimal.
Michael Blowhard
Jan 20 2009 at 5:02am
Another big Oakeshott fan here, glad to see that you’re intrigued by him. In fact I might call Oakeshott my fave philosopher of them all. About half the essays in “Rationalism in Politics” are mind-blowers. And his writing style is really something — subtle, difficult in a way I enjoy … He’s an aesthete on the one hand, and quite a cold-blooded considerer of politics on the other. Nice combo.
Tim Nutt
Jan 20 2009 at 11:49am
Arnold, I have not heard a good explanation for what brought Countrywide down either, but I suppose it has to be one of two things. The first is they ended up holding their own, or purchasing mortgage-backed securities, but either way ended up holding a lot of worthless paper on their balance sheet, presumably because they didn’t realize just how worthless it was. The second is that they never intended to hold any worthless paper, because they knew how worthless it was, but when the music stopped, they had a fair amount of originated mortgages that they intended to sell, but could find no buyer. They would have to be really thinly capitalized for the second scenario to bring them down, but I assume they were. I consider either scenario plausible, but I am more inclined to the first. I tend to attribute most of the financial problems to stupidity over malice.
I suppose the third possibility is the simple, classical bankruptcy scenario where their fixed costs were too high when their profits disappeared, but I can’t really see how they would have had significant fixed costs.
Great post, thanks.
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